The World Bank (WB) has asked the Central Board of Revenue (CBR) to withdraw the Temporary Importation Scheme, simplify the Duty and Tax Remission for Export (DTRE) rules, and ensure speedy payment of duty drawback to exporters.
Sources told Business Recorder on Tuesday that WB had expressed concern over the existing schemes permitting duties/taxes-free import of raw materials used in the manufacture of export products.
The WB said that one of the important objectives of duty and tax rebate schemes is to encourage the newly registered small exporters. This is critical for export diversification. The feedback from small exporters indicates that the rebate schemes are not effective.
The World Bank recommended that the CBR should continue to simplify the rules and notifications related to duty drawback and improve the prevailing system.
In budget 2005-06, the CBR had reduced duty drawback notifications from 110 to four and clubbed 723 duty drawback rates into 465. The measure is likely to help the small exporters, who are less able to make through the maze of complicated duty drawback notifications.
The revised DTRE scheme, notified in budget 2005-06, has incorporated changes to address a number of problems being faced by the exporters under the old scheme. The CBR should further improve the DTRE scheme and take away schemes like Temporary Importation to avoid duplication. The board should also launch awareness campaign about the revised DTRE scheme.
According to World Bank, the delay in the payment of duty drawback to exporters hurts export competitiveness. This is one of the reasons that most of the countries have adopted sales tax zero-rating regime to avoid payment of refund to exporters.
It is necessary to have a well-functioning duty drawback system to increase exports of strategically important items. Duty drawback scheme is the only tool of duty-free access to inputs/raw material.
Comments
Comments are closed.